I think the danger is in the big automakers getting EV right, before Tesla reaches the middle and low end of the market. Nissan has the Leaf, which is by most accounts, a great little car. The Chevy Volt is the best-selling in my neck of the woods, it seems. Tesla makes better electric cars...as far as the reviews indicate. But, they're also much more expensive.
But, here's the reason I just placed a limit order for tomorrow morning (I'd check into TSLA a couple of times this year and thought, "Nope, still trading too high."): Tesla is currently selling as many cars in a year as Chevy sells in three days. So, the stories I can envision in my head for how this will play out are one of the two:
1. Tesla will fail to scale up. They will not be able to continue executing on their business plan effective. Growth will halt. The big auto makers will gradually move into the EV market. They will use their leverage as larger players with more money to throw around to beat Tesla on the battery front and on manufacturing costs. Tesla will remain a bit player, and be bought up for patents in a few years. The stock will not do well, long term, in this scenario.
2. Tesla will continue to execute well, if not flawlessly as they have done up to now (let's be honest, Tesla has an amazing record of doing the right thing at the right time). They will continue to grow at a very rapid clip. They will enter new markets. They will sell more cars than they can manufacture (and maybe more electric cars than anyone else can manufacture also, due to the current limited battery availability). They will continue to execute well on battery acquisition and development. They will continue to execute well on solving the cross-country EV trip problem...before any other manufacturer. And, they will become a major automaker. The market is huge. They're less than 100th the size of Chevrolet or Ford. That's a lot of room for growth, even with their share price being hundreds of times earnings (yes, it really is a very expensive stock, in that regard).
So, my primary question is: Will they execute really well. History says they will.
And, my next question is: Will I get other chances to buy at a discount over what it's trading at now? I don't know. I've regretted not buying stocks in the past due to it looking really expensive. I put off buying GOOG for a long time. Watched it from IPO on up to $750+. Then it went on sale for $340, and I backed up the truck as well as my stock portfolio would allow (so, I'm currently approaching a triple bagger on GOOG). TSLA is no GOOG. Probably never will be. But, it's potentially a much larger company than it is today. I'm willing to bet a few bucks that it will be. But, it is definitely gambling and not value investing.
They will sell more cars than they can manufacture (and maybe more electric cars than anyone else can manufacture also, due to the current limited battery availability). They will continue to execute well on battery acquisition and development.
Business: What's the shrewdest, smartest maneuver you've ever seen in business?
Cool little blurb hand-soap:
There was only one problem: Nothing he was selling could be patented. The concept of liquid soap wasn't new, and simple pumps had been around since the dawn of civilization. As a result, Taylor knew several huge soap manufacturers were ready to happily steal his idea the very moment it looked like it could succeed on a large scale. Armed with superior resources and the ability to quickly R&D an imitation product, the industry giants were ready to crush tiny Minnetonka.
Taylor, however, was ready for this. Before any other company had the chance, Taylor decided to go shopping one day and bought a few plastic pumps. And by a few we mean FUCKING ALL OF THEM. There were only two companies nationwide manufacturing those little pumps, and Taylor ponied up $12 million -- more than the total net worth of his company at the time -- and ordered 100 million of them, effectively buying every single pump these two companies would be able to manufacture for the next year or two.
Not really much stupidity. Corporate limited liability. He placed a bunch of orders and bet his company on the outcome of his product, but he would have been just as out of business if no one bought his soap.
I do believe the volt makes Chevrolet a loss for every unit sold. If this is a deliberate loss leader to put Tesla out of business, then it is an issue. They're all looking for market share, but Tesla has less capital backing. OTOH it has less crummy baacklog and infrastructure, so it may be nimble eough to survive
Considering the state of battery technology did Tesla have any choice? Even their new X will be more expensive than the S.
To get his range he needed long wheelbase large cars. To get range he needed more than a 1000lbs of batteries.
He won't get to the lower end of the market unless batteries improve and by then he will have ceded it to the established players who will and are willing to offer more than electric only solutions.
That's a pretty small market - BMW only makes about 4000 M5s a year and I'd be surprised if the sales of equivalent models from other manufacturers were much higher.
But, here's the reason I just placed a limit order for tomorrow morning (I'd check into TSLA a couple of times this year and thought, "Nope, still trading too high."): Tesla is currently selling as many cars in a year as Chevy sells in three days. So, the stories I can envision in my head for how this will play out are one of the two:
1. Tesla will fail to scale up. They will not be able to continue executing on their business plan effective. Growth will halt. The big auto makers will gradually move into the EV market. They will use their leverage as larger players with more money to throw around to beat Tesla on the battery front and on manufacturing costs. Tesla will remain a bit player, and be bought up for patents in a few years. The stock will not do well, long term, in this scenario.
2. Tesla will continue to execute well, if not flawlessly as they have done up to now (let's be honest, Tesla has an amazing record of doing the right thing at the right time). They will continue to grow at a very rapid clip. They will enter new markets. They will sell more cars than they can manufacture (and maybe more electric cars than anyone else can manufacture also, due to the current limited battery availability). They will continue to execute well on battery acquisition and development. They will continue to execute well on solving the cross-country EV trip problem...before any other manufacturer. And, they will become a major automaker. The market is huge. They're less than 100th the size of Chevrolet or Ford. That's a lot of room for growth, even with their share price being hundreds of times earnings (yes, it really is a very expensive stock, in that regard).
So, my primary question is: Will they execute really well. History says they will.
And, my next question is: Will I get other chances to buy at a discount over what it's trading at now? I don't know. I've regretted not buying stocks in the past due to it looking really expensive. I put off buying GOOG for a long time. Watched it from IPO on up to $750+. Then it went on sale for $340, and I backed up the truck as well as my stock portfolio would allow (so, I'm currently approaching a triple bagger on GOOG). TSLA is no GOOG. Probably never will be. But, it's potentially a much larger company than it is today. I'm willing to bet a few bucks that it will be. But, it is definitely gambling and not value investing.